Withholding

I noticed on my retirement check that the Income Tax withholding had increased. About $10.00. Not that the ten bucks is that important. My retirement check is a very small part of my income, but because it goes into a special account and I noticed the difference in the deposit.

President Obama promised that the middle class wouldn't see any tax increase, and based on the tiny amount of my retirement check, any increase in withholding represents what might be an unacceptable reduction in income if I were on a fixed retirement budget. Fortunately, that isn't the case, but for lots of retirees, that is the case.

As the story turns out, it's a simple change in the withholding tables, which doesn't represent a tax increase, but it does represent a reduction in income for lots of retirees that aren't as fortunate as I.

The trick, when looking at the new withholding tax tables for 2010 as compared to post-stimulus 2009, buries an increase in federal withholding taxes–for all income categories–basically giving the government an interest-free loan until current year taxes are filed next year. Some would blame the increase in withholding on the Making Work Pay tax credit being spread out over 12 months as compared to 2009, which was only over 9 months, but this would be impossible as some middle class wage categories carry an increase in the withholding tax of over $200 per pay period.

As far as I'm concerned it's a damned dirty, low-down trick to try to balance the budget on the backs of retirees. The government is basically extorting an interest-free loan from those least able to afford it. We should remember that come election time.